The Consumer Prices Index (CPI) rate of inflation has declined to 1.3 per cent over December, below the Bank of England’s 2 per cent target and hitting its lowest level since November 2016.

This is the fifth month in a row that the inflation rate has been below the target.

Figures published by the Office for National Statistics (ONS) revealed that CPI fell from 1.5 per cent to 1.3 per cent..

Furthermore, the CPI including owner occupiers’ housing cost (CPIH) also decreased, from 1.5 per cent at the end of November to 1.4 per cent.

Commenting on the decline, Aegon pensions director, Steven Cameron, said: “As expected CPI inflation came in below the Bank of England’s 2 per cent target at 1.3 per cent for the 12 months to December, down from 1.5 per cent in November.

“Below target inflation, for a fifth month in a row, may provide consumers some relief from the cost of living but on the flip side there will be no cheer among savers.

“Last year was dominated by Brexit uncertainty so the big question is how inflation, as well as interest rates will move once the UK actually leaves the EU.

“Low inflation is good news for those on a fixed income, including pensioners, who are on course to see a further boost thanks to the triple lock, with a rise of 3.9 per cent in their state pension from April 2020.”

The ONS noted that the largest contribution to the CPIH rate came from housing, water, electricity, gas and other fuels.

However, this was outweighed by the largest downward contributions, which came from accommodation services and clothing.

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